A historic legal battle is going on right now over the right to subpoena foreign banks that have branches in U.S. soil, reported by Reuters.
On one side Gucci and Tiffany say they can prove that Chinese counterfeiters are running money through Bank of China, China Merchants Bank and the Industrial and Commercial Bank of China. The luxury good giants want the banks, which have branches in New York, to freeze these assets and hand over information about their clients.
On the other side is an unlikely defender: the Federal Reserve Bank of New York.
The NY Fed argued that the case was a threat to foreign banks operating in America. A former Fed lawyer told Reuters:
"If every global bank in New York can be subpoenaed globally, it doesn't matter what country it's from, the answer will be, 'I'm outta here,'" said Ernest Patrikis, a partner at White & Case and a former lawyer for the New York Fed. "'We'll just do our business in London.'"
Lawyers for the Chinese banks, backed by the Fed, were successful in a preliminary ruling, which forced Tiffany's and Gucci to seek information through international law from the bank headquarters in China.
Gucci was successful in shutting down websites like bagsmerchant.com and obtaining some payment for damages.
